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Week Ahead: Under Pressure, Big Banks Kick Off Earnings

Despite several headwinds, we generally think banks look undervalued heading into earnings season.

Week Ahead: Under Pressure, Big Banks Kick Off Earnings

For Morningstar, I'm Jeremy Glaser. Welcome to The Week Ahead, our quick take on what investors should have on their radar screens for the week starting April 11.

First-quarter earnings seasons kicks off this week. Many of the big banks will report, including JP Morgan Chase, Wells Fargo, Bank of America, and Citigroup.

These firms have been under pressure so far in 2016. There have been concerns about the banks' exposure to the energy sector, worries about how market volatility will impact capital markets and wealth management revenue, the impact of continued low rates on profitability, and the prospect that regulators may ask banks to hold capital and scale back dividend payouts and stock buybacks.

Morningstar analysts think that most of these fears are overdone and that a number of values have opened up among large banks in the United States and Europe. Still, 2016 is likely to not go down in history as a great year for bank earnings, and we expect to see some choppiness in this week's results.

We will also hear from Alcoa and wide-moat railroad CSX.

There is some important economic data this week too. Last month, there were emerging signs that inflation was heating up, and the consumer price index due Thursday will show if pressures are indeed building.

Retail sales will provide a glimpse into the state of the consumer on Wednesday, while Friday's industrial production numbers will provide an update on that part of the economy.

Stay tuned to Morningstar for our take on all of these stories. 


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